Tuesday, October 19, 2010

Oasis Petroleum (NYSE:OAS) Trading Beyond Valuation?

Oasis Petroleum (NYSE:OAS) has soared since its initial public offering in Jue 2009, soaring about 60 percent since that time.

But according to UBS (NYSE:UBS), they believe the company at this time is trading at 2P valuations that are unsustainable in the short term. Consequently UBS downgraded Oasis from "Buy" to "Neutral."

UBS analyst says, "Since its June IPO, shares of OAS have rallied 60% vs. oily peers of 23%. We attribute the rapid appreciation to: 1) solid operational execution across its first set of Bakken wells; 2) increased M&A activity in the Bakken; and 3) broader confidence in Bakken resource potential. While we still view the company favourably in terms of fundamentals, we now believe the market is trading the company beyond 2P valuations and may be attempting to price in a takeout premium that we believe is unlikely to take place," said UBS.